Why employers run credit checks on job applicants

If you are qualified for a certain job but routinely turned down after a potential employer checks your credit record, the best tip is to move to Washington or Hawaii. These two states have banned employee credit checks, with certain exceptions. If you apply for a position in a financial institution, state or local government agency, or a position which involves national security, it is reasonable that the employer would run a credit check on you.

Employees in finance need to be able to handle their own money if they are going to be responsible for others finances. Someone with a large amount of debt may be more easily bribed if they are involved in national security. It is clear that some positions call for credit certain checks to be carried out before a job offer is extended.

However 60% of employers routinely carry out credit checks on potential and existing employees, citing their reasons as assessing an applicant’s sense of responsibility and honesty. The theory is that a person who is lax at dealing with their bills will be lax in taking their job responsibilities seriously, and may turn out to be an unreliable employee. Those with a high level of debt may be assumed to be more likely to commit workplace theft or fraud.

Employers must obtain written permission before they order a credit check. Only the credit report is allowed, not the credit score. However if there is large debt a credit report does not differentiate between an addicted gambler and someone who has incurred large medical bills. Whilst a credit report could indicate that someone is irresponsible, it is a random judgment to assume that someone who is perfectly honest is a potential thief because they may have some unpaid bills.

The result is that people are being routinely turned down for jobs which they are qualified for, which many believe amounts to employment discrimination. It penalizes those who have lost their jobs and have run up debts through lack of work. Employers defend the practice but some state that they are only concerned with major problems on the credit report such as court judgments and bankruptcy orders, and high levels of debt. They use the checks as an attempt to screen against workplace fraud. One issue which is rarely raised regarding credit employee credit checks is the invasion of privacy.

Currently sixteen US states are waiting to hear if Bill HR 349 will be passed in Congress, which will put an end to non essential credit checks on employees. Amongst those opposing the proposed change to the Fair Credit Reporting Act are the credit bureaus responsible for issuing the credit reports. In Hawaii and Washington where such checks are already barred employers are not known to have been adversely affected by the ban.

The whole business of employee credit checks underlines just how important maintaining good credit has become in so many areas of life. Your credit report is a fair indication of how well you handle your financial responsibility but is now used as a character assessment as well. –http://www.helium.com/items/1972684-why-employers-run-credit-checks-on-job-applicants